$100 → $55 in 20yr
What is inflation?
Inflation is the rate at which the general level of prices rises, reducing the purchasing power of money. At 3% annual inflation, $100 today buys what $55 would buy in 20 years. The US Federal Reserve targets 2% annual inflation. Inflation is measured by the Consumer Price Index (CPI), which tracks the price of a basket of ~80,000 goods and services monthly.
Level
Try calculatorKey takeaways
04 · ideas- Inflation = the same money buys less over time
- At 3% inflation, purchasing power halves every 24 years
- Measured by the Consumer Price Index (CPI) tracking ~80,000 prices
- Savings accounts earning less than inflation are losing real value
Illustrative chart
$200k · 7.5% · 30yr
Loading…
Inflation means your money buys less over time. Prices gradually rise, so the same $100 gets you less groceries, less gas, and less of almost everything.
A concrete example:- 1990: A movie ticket cost $4.22
- 2024: That same ticket costs $13.00
- That's 208% more — driven by inflation over 34 years
- Your $100 today = $97 in purchasing power next year
- In 10 years = $74
- In 20 years = $55
- In 30 years = $41
Why inflation happens: Too much money chasing too few goods. When demand exceeds supply — or when the money supply grows faster than economic output — prices rise.
Winners and losers from inflation:- Losers: People holding cash, bonds with fixed payments, anyone on a fixed income
- Winners: Homeowners (home values rise), stock investors, borrowers with fixed-rate debt (paying back cheaper dollars)